Sustainable Contracting for a Non-Extractive Economy

Jie Ouyang

N-EXTLAW Working Paper Series, no. 1 (1/2023)

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Abstract: Business runs on contracts, making them one of the most important legal vehicles compounding the effect of extractive capitalism. But the very ubiquity of contracts hides its potential to be refitted as an effective governance tool for just commercial transactions. Drawing on the theory of relational contract, this report repurposes commercial contracts as a relational governance device with a hybrid compliance mechanism that navigates the purpose-driven co-operation between the parties. It offers some guidelines on contract drafting and informal and formal enforcement for non-extractive entities who are struggling to find their way around non-extractive practices. It further unsettles some unchallenged contract law doctrines by reflecting on third-party rights and just price rule, calling for reform of contract law and adjudication to make non-extractive contracting an easier and more attractive option for all business operators. Against the broader vision of a non-extractive economy, non-extractive contracting opens the gate for us to reimagine contracts as an enabling toolkit. Contracts should no longer be solely driven by an economic engine to amplify commodifying capitalism; they should evolve into a governance vehicle that embeds and fuels non-extraction by bringing care, purpose and ethics back into our zeitgeist.